By James Brehm

Earlier today, another acquisition in the M2M space was announced. CVC Capital, a $71 Billion dollar private equity firm entered into an agreement to acquire Wireless Logic for $325 million. Wireless Logic is the largest M2M MVNO in Europe, with approximately 1.5 million connected devices under management. When I look at the deal on the surface, I think “another high priced acquisition.” But, when you really examine it, CVC must have badly wanted to get into the market, because in my opinion, it drastically overpaid.

Looking further into the Wireless Logic organization, sure they’re a growing concern with 1.5 million connections, but they’re also not the stickiest connections in the world. Churn and connection value (ARPU) could eat this deal up. While most people are looking at revenue and EBIDTA as markers for a valuation, I’m going to look at this purely based on dollars per connection and compare it to a US based M2M MVNO, Numerex.

Numerex began the day with a market cap of $201 million, and has over a million more connections on its network. If you use the price CVC paid for Wireless Logic of $215.84 per connection to Numerex’s 2.6 million connections, Numerex should be valued at north of $530 Million.

Do I think Numerex is a half-billion dollar company? No. But at $201 million, I think they’re grossly undervalued!